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TheStreet Open House

Why AutoNation (AN) Stock Is Gaining In Pre-Market Trading Today

NEW YORK (TheStreet) -- Shares of AutoNation Inc. (AN) are higher by 3.52% to $58.50 in pre-market trading on Friday following a ratings upgrade to "buy" from "neutral" at Goldman Sachs (GS).

The firm said it raised its rating on the U.S. automotive retailer based on the company's best in class industry margins, strong growth outlook, and better core efficiency margins.

Goldman raised its price target on the stock to $65 from $56.

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Separately, TheStreet Ratings team rates AUTONATION INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AUTONATION INC (AN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, reasonable valuation levels and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AN's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 6.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • AUTONATION INC has improved earnings per share by 16.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AUTONATION INC increased its bottom line by earning $3.05 versus $2.53 in the prior year. This year, the market expects an improvement in earnings ($3.40 versus $3.05).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, AUTONATION INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: AN Ratings Report
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